Saturday, January 12, 2013

Despite the advertising, one size does not fit all; it seldom fits any.

Sauce, Goose & Gander: So far, Congress has cut about $1.2 trillion from the projected 10-year deficit, 28% from tax increases and 72% from spending cuts. To stabilize the public debt as a percent of GDP, another $1.2 trillion in spending cuts and revenue increases are needed. To meet the Republican demand of dollar for dollar tax increase to spending cuts, 90% of that would have to be in the form of tax increases. Sounds about right.

Observation: “Your war, waged under a fake banner of human rights and democracy, is in fact a war against poor Afghan people. You are not only traitors to the Afghan people, but to your own people as well. You are stealing from the pockets of poor Americans and Europeans and wasting billions of dollars on killing and looting in order to safeguard only the interests of a very small, elite minority.” Ah, to see ourselves as others see us.

Correction: 'Catastrophic Mass Extinction' Likely if Temperatures Rise 6 Degrees in Next Century

Gospel: The US is staggering from fiscal crisis to fiscal crisis. The politicians, having failed to throw the economy off a cliff in January, now seem intent on smashing it against the debt ceiling in a month or so. How did we get into these traps? Ideology. Specifically Grover Norquist's anti-tax idiot-ology, which has been swallowed whole by the Republicans. They have no empirical basis for this silliness. A top marginal tax rate of 35% is inherently neither better nor worse for the economy than 70% or 90%. We need to look at “what are taxes for?” and decide how much taxation is necessary to meet society's goals. But signing an ideologically based pledge removes all the hard work of trying to figure things out. It eliminates the need to think. To cross oneself and chant "free markets, no taxes" is to substitute faith for facts, to place unquestioned loyalty above the need to save lives and provide for the common good. Because dreams trump reality. This is not a new play.

Rose Colored Oil Drums: A growing chorus claims that US oil production will rise to 7.9 million barrels a day by 2014. Then what? Doesn't this mean we will be depleting our remaining resources even quicker? Oh wait, rising prices create oil...

Two Rights, One Wrong: Economists claim that free trade agreements benefit the countries involved. The American workers think know that they are worse off. Both are right, but you have to squint your eyes and accept that by 'countries' the economists mean 'the capitalists who run the countries”. They make the rich, richer & the poor more numerous.

Bulletproof: Yet another study reports that Americans have the poorest health and shortest lifespan among citizens of developed countries. We die at higher rates from violence - homicide to car accidents, from alcohol and drugs, from heart and lung disease, obesity, diabetes and on and on. The solutions, they say, are affordable health, education, a better social safety net, fewer guns. Blah, blah, blah. Don't pay any attention, they're just jealous. We're Number One!, just ask anyone.

Whistling In The Dark: In December the US budget deficit was a paltry $260 million. But don't let me distract you from the debt and deficit crisis.

Asked and Answered: Is it time to kill off Wall Street? Yes. As the daily press testifies, Wall Street is inhabited primarily by “crooks and scoundrels, and very clever ones at that; in short, they are villains.” Regulators and regulations kept bankers and other well dressed brigands in check for nearly 40 years after they brought on the Great Depression. During that time major financial crises were conspicuously absent, while capital investment, productivity, and wages grew at rates that lifted tens of millions of working Americans into the middle class. Since Wall Street captured Washington and abolished regulation and oversight, financial blowups have proliferated and living standards have plummeted. There's a teaching point somewhere in there.

10 comments:

A/A: Indeed, the period from 1945-1980 was likely the America's Golden Age. Around 1985, it was as if somebody flipped a switch and Wall Street began its transformation into the Frankenstein that we see today. Any guesses what that "switch" was? The 401(k). The stock markets exponential increase from 1985 to 2000, was strictly due to 401(k) contributions and pension rollowvers. As the market grew, the investment banks grew more powerful, and systematically dismantled all regulatory watchdogs. Ironic, no?

Ah, the law of unintended consequences, once again. Although contributory, I'd guess that the 401k alone would not have been a sufficient cause - it took deregulation, regulatory capture and a failing institutional memory to provide the arena in which uncontrolled greed could reign supreme.

“Your war, waged under a fake banner of human rights and democracy..."

Furthermore, here's an article written by an Afghani pointing out massive unprosecuted Corruption in the US and specifically Massachusetts:

"In the United States, the systemic government corruption is not limited to the loss of public funds and cronyism, but extends to a wide range of dishonest and illegal practices which shield those with political connections. American is literally a land of two peoples; those to whom the law applies and those who are above the law."

Yes, read the start of that piece. What is Asia to become with the gifts we have left in our wake? No legacy of wise reconstruction like the 40's, for sure. In the short term I hope for limited bellicosity on the part of of prodigy and nemesis.

«Ideology. Specifically Grover Norquist's anti-tax idiot-ology, which has been swallowed whole by the Republicans. They have no empirical basis for this silliness. A top marginal tax rate of 35% is inherently neither better nor worse for the economy than 70% or 90%. We need to look at “what are taxes for?” and decide how much taxation is necessary to meet society's goals.»

Oh please this is is an incredible misunderstanding (or huge hypocrisy).

The Republicans and their sponsors are not at all against big government, or high taxes, as such.

They are again redistributive big government and high taxes, and more precisely downwards redistribution from "winners" to "losers".

Republicans and their sponsors are then against big government and high taxes because they are persuaded that in a democracy the "losers" will always vote for redistribution to themselves from "winners", and that's why they hate big government and high taxes: as tools of that redistribution.

In all cases where big government and high taxes redistribute upwards Republicans and their sponsors have no issue with big government and high taxes; as long as the taxes are regressive, like fees, capitation and consumption taxes, and big government spending is about protecting big property interests (law and order), boosting opportunities to big business (Medicare part D, some infrastructure spending, ...), and opening foreign markets for big property interests (military spending), they are all for that.

The issue is downwards redistribution, and the ideology they really have is about that.

When you write «decide how much taxation is necessary to meet society's goals» you really mean redistributing income from high income people to low income people, in the eyes of Republicans, but also of any sensible people, because obviously you are not proposing to heavily tax/fine/fee the unemployed and the poor to give rewards to investment bankers to thank them for generating so much wealth for the country.

Republicans and their sponsors of course ideally would like upwards redistribution, and vote for that at every opportunity (defense budget, TARP, ...) but they talk about smaller government and lower taxes to obfuscate the real goal, which is to prevent at least downwards redistribution, and to please the other, "mass", components of their coalition, those they need to get enough votes to stop downwards redistribution.

Norquist has a brilliant mind, and this is a very revealing (even if I think he said some things in there that he does not mean) interview:

«Regulators and regulations kept bankers and other well dressed brigands in check for nearly 40 years after they brought on the Great Depression. During that time major financial crises were conspicuously absent, while capital investment, productivity, and wages grew at rates that lifted tens of millions of working Americans into the middle class. Since Wall Street captured Washington and abolished regulation and oversight, financial blowups have proliferated and living standards have plummeted.»

This is the usual populist narrative, and I think it is really wrong, because it is a cartoonish and highly misleading oversimplification of evil corrupted politicians and bureaucrats doing the bidding of Wall Street villains.

I'll start from some quotes from J. K. Galbraith's "The Great Crash 1929":

page 25: «Just as Republican orators for a generation after Appomattox made use of the bloody shirt, so for a generation Democrats have been warning that to elect Republicans is to invite another disaster like that of 1929. The defeat of the Democratic candidate in 1952 was widely attributed to the unfortunate appearance at the polls of too many youths who knew only by hearsay of the horrors of those days. It would be good to know whether, indeed, we shall some day have another 1929.»

page 28: «Since 1929 we have enacted numerous laws designed to make securities speculation more honest and, it is hoped, more readily restrained. None of these is a perfect safeguard. The signal feature of the mass escape from reality that occurred in 1929 and before -- and which has characterized every previous speculative outburst from the South Sea Bubble to the Florida land boom -- was that it carried Authority with it. Governments were either bemused as the speculators or they deemed it unwise to be sane at a time when sanity exposed one to ridicule, condemnation for spoiling the game, or the threat of severe political retribution.»

page 32: «One thing in the twenties should have been visible even to Coolidge. It concerned the American people of whose character he had spoken so well. Along with the sterling qualities he praised, they were also displaying an inordinate desire to get rich quickly with a minimum of physical effort.»

page 206: «Yet, in some respects, the chances for a recurrence of a speculative orgy are rather good. No one can doubt that the American people remain susceptible to the speculative mood -- to the conviction that enterprise can be attended by unlimited rewards, which they, individually, were meant to share. A rising market can still bring the reality of riches. This, in turn, can draw more and more people to participate. The government preventatives and controls are ready. In the hands of a determined government their efficacy cannot be doubted. There are, however, a hundred reasons why a government will determine not to use them. In our democracy an election is in the offing even on the day after an election. The avoidance of depression and prevention of unemployment have become for politicians the most critical of all questions of public policy. Action to break up a boom must always be weighted against the chance that it will cause unemployment at a politically inopportune moment. Booms, it must be noted, are not stopped, until after they have started. And after they have started the action will always look, as it did to the frightened men in the Federal Reserve Board in February 1929, like a decision in favour of immediate as against ultimate death. As we have seen, the immediate death not only had the the disadvantage of being immediate but of identifying the executioner.»

There are many other relevant quotes from that book.

One of the key issues Galbraith raises is «political retribution», that is regulators must have political support from voters to take on entrenched, clever cons with deep pockets.

The general gist I want to convey is that it is not «Regulators and regulations» but rather voters who «kept bankers and other well dressed brigands in check for nearly 40 years after they brought on the Great Depression.», and «Wall Street» captured voters and not «Washington», and it is voters who resoundingly continued to re-elect people who «abolished regulation and oversight».

It is voters who have provided massive, deep political cover for 25 years for the looting of the economy by big property interests, because voters have been deluded for 25 years that they were too property interest winners, and they could not care less about the living standards of losers: "F*CK YOU! I GOT MINE" is the American Dream after all.

Norquist summarized this very well indeed in my usual quote:

«And that is, in 2002, on the investor class stuff … you could have said, just drop $7 trillion in stock market value with the collapse of the bubble ... $7 trillion, trillions with a T ... Americans had $7 trillion less than they used to have, you can expect them to be very irritated and in trouble.[ ... ]They were mad at having lower stock prices and 401(k)s, but they didn't say Bush did this and that caused this. Secondly, the Democratic solution was to sic the trial lawyers on Enron and finish it off. No no no no no.

We want our market caps to go back up, not low. The 1930s rhetoric was bash business -- only a handful of bankers thought that meant them.

Now if you say we're going to smash the big corporations, 60-plus percent of voters say "That's my retirement you're messing with. I don't appreciate that". And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher.

And in 2002, voters said, “We're sorry about the seals and everything but we really got to get the stock market up.”»

Our Motto

Keep fightin' for freedom and justice, beloveds, but don't you forget to have fun doin' it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin' ass and celebratin' the sheer joy of a good fight, be sure to tell those who come after how much fun it was.